Human Resource Planning
HRP defined
• According to Coleman
“it is the process of determining manpower requirements
and the means for meeting those requirements in order
to carry out the integrated plan of the organization”
• Strainer defines it as
“a strategy for the acquisition, utilization, improvement,
and presentation of an enterprise’s human resources”
Objectives of HRP
• To ensure adequate supply of manpower
• Ensure proper use of existing human resources
• Forecast future requirements of human resources with different levels of
skills
• Assess surplus or shortage, if any, of human resources available over a
period of time
• Anticipate the impact of technology on jobs
• Control the human resources already deployed in the organization
• Provide lead time available to select and train the required additional
human resources
Need for HRP
• Despite unemployment, there has been a shortage of human resources
with required skills, qualifications and capabilities
• Employees who retire, die, leave organizations or become incapacitated,
need to be replaced by new employees
• It is also essential in the force of marked rise in workforce turnover which is
unavoidable
• It is needed in order to meet the needs of expansion and diversification
programmes
• Technological changes and globalization usher in change in method of
production which may require a change in the skills of the employees
HRP Process
• Organizational environment scanning
• Formulation of HR objectives and policies
• Demand forecasting
• Supply forecasting
• HR programming
• HRP implementation
• HRP controlling and evaluation
Demand forecasting techniques
– Ratio Trend Analysis
• Refers to the technique under which ratios are calculated (e.g., total output/total
number of workers, total sales volume/ number of sales persons)
• Example,
Units produced in 2005-06 = 10,000
Number of workers in2005-06 = 500
Ratio = 500 : 10,000 = 1:20
Estimated production in 2007-08 = 25,000
Number of workers required in 2007-08 = Estimated production x Ratio
Number of workers required in 2007- 08 = 25000 x 1/20 = 1250
Demand forecasting techniques
– Regression Analysis
• In this technique, regression equations are formed and solves with the help of
different software
• It is used to forecast the future workforce demand based on factors such as sales,
output, profit, productivity and existing number of employees
– Bureks – Smith Model
• Mathematical model based on selected key variables that influence the overall
workforce needs
En = [(Lagg + G) 1/X] Y
Where,
En = Estimated human resource demand
n = Planning period
Lagg = Overall turnover or aggregate level of business activity in Rupees
G = Total growth in business activity during period n
X = Average improvement in productivity
Y = Conversion figure that relates the present overall activity to the human resource needed
Demand forecasting techniques
– Work Study Technique
• It is used in cases where it is possible to measure the work to determine the
duration of the operations and the number of employees required
• It estimates the required number of employees possessing desirable skill sets to
accomplish the total production targets
• Example,
Planned output for the next year = 25,000 units
Standard hours per unit = 4 hours
Planned hours required for the work = 25,000 X 4 = 1,00,000
Productive hours per worker per year = 2,000
Number of workers required = 1,00,000/2,000 = 50
Demand forecasting techniques
– Management Judgment or Managerial Judgment
• Managers sit together and discuss their future work assignments and tasks, and
estimates how many people they need
• It can be either ‘bottom-up’ or ‘top-down’
• In case of bottom-up approach, line managers prepare departmental requirements
for human resource and submit it to top managers for their review
• In the top-down approach, the top managers prepare the departmental forecasts
which are reviewed with the departmental heads or managers
– Expert opinion
• Refers to the technique based on the executive or expert decisions provided by the
different departmental heads or other knowledgeable persons
• The judgmental views of experts are collected to produce a forecast about the
future manpower demand
Demand forecasting techniques
– Group Brainstorming
• Involves face-to-face discussion on various issues by experts who make some
assumptions about the future course of action for the business
• Experts first examine the strategic plans of the organization and then try to predict
the future demand of employees
– Nominal Group Technique (NGT)
• A problem or issue is presented to the group and each member of the group
individually produces as many solutions as possible
• All generated answers are presented to the group for clarification
• The group proposes the most feasible and realistic solutions based on the
clarifications
Demand forecasting techniques
– Delphi Technique
• A series of questions is individually asked to a jury of experts about their
perceptions of future events.
• In this technique, the direct interaction among the members is avoided
• It involves the use of questionnaires and the results are fed back to the group
members so that they can come to a consensus
• This method is however, very time consuming
Supply forecasting techniques
– Markov Analysis or Flow Models
• Uses historical flow rates of workforce to predict future rates
• The flow of workforce over years within the organization is shown by means of
probabilities
• The probability of how many existing employees would be retained, transferred,
promoted, terminated, resigned and demoted is estimated
• Thereafter, future workforce flows are estimated based on the present data
– Turnover Analysis
• Examines the attrition rate and its historical trends in detail
• The information for the analysis is gathered from exit interviews and labour
turnover rates are calculated from the past data
• The turnover rates are estimated for each job category, department and division
Supply forecasting techniques
– Goal Programming
• The desirable employment pattern is estimated considering various potential
constraints, such as total salary budget and limit of the new employees that can be
recruited
– Skill Inventory
• Refers to the technique in which skills, knowledge, abilities, expertise and career
aspirations of present pool of human resource is assessed
• The existing skill inventory should be updated every two years to incorporate the
changes
Supply forecasting techniques
– Succession Planning
• Involves the preparation of an inventory report of executives representing which
candidates are prepared to be promoted to the higher managerial level positions in
the organization
– Replacement Chart
• Refers to the short-term replacement schedules that map the possible substitution
of the employees within the hierarchy of the organization
• Can be used in predicting internal supply, especially for the managerial positions
HR programming
• This step deals with the reconciliation of demand and supply
• It is also termed as Human Resource Gap Analysis
• It provides the basis for preparing Human Resource plans by
eliminating the gap between the demand and supply of
human resource
If shortage of employees is expected
• Hire new full time employees
• Offer incentives for postponing retirement
• Re-hire retired employees on part-time basis
• Attempt to reduce turnover
• Overtime for present staff
• Sub-contract work to another company
• Hire temporary employees
If a surplus of employees is expected
• Incentives for early retirement
• Transfer/ redeployment by placing employees in another
branch or department
• Retrenchment /Lay-off
• Do not replace employees who leave the organization with
new ones’
• Outplacement
• Use slack time for employee training
HRP Implementation and Controlling and
Evaluation
• HRP implementation involves the execution of HR plans
• The last step involves monitoring and controlling of HR plans
to ensure their proper execution
• HR plans should be developed considering the budget, time
limits, targets and established standards